Telecom minister proposes relief measures but will pursue Aircel spectrum

28 Jun 2019

Communications Minister Ravi Shankar Prasad has proposed a series of relief measures for the telecom sector, but is also pressing for the revocation of bankrupt cellcos spectrum licences, the Economic Times reports. The minister has suggested reducing the universal service obligation fund (USOF) fee to lower the overall licence fee from the current 8% of earnings (split 5% USOF levy, 3% administrative charges) to 6%, as well as lowering the goods and service tax (GST) rate on mobile services from 18% to 12%, although the latter is outside of the remit of the communications ministry. The Department of Telecommunications (DoT) is also pursuing the immediate refund of INR300 billion (USD4.3 billion) blocked or delayed GST credits owed to telcos.

At the same time, however, the minister told parliament that the government would seek to revoke the spectrum rights of bankrupt provider Aircel for non-payment of dues. As previously noted by TeleGeography’s CommsUpdate, the DoT has argued that Aircel does not own the spectrum and, as such, the frequencies cannot be sold as an asset as part of the company’s bankruptcy resolution process. The National Company Law Tribunal (NCLT) has ordered the DoT not to take any ‘coercive action’ against the telco but the DoT has challenged the order. Aircel is relying on the sale of its spectrum licences to repay its creditors, and the firm’s bankruptcy resolution professional has warned that revoking the airwaves would cause the company to go into liquidation immediately. Reliance Communications (RCOM) may be facing similar treatment, with the minister saying that a legal opinion on its options was being examined.